ROBO ETFs: Q1 Market Brief
Q1 2025 Performance Review: ROBO, THNQ, and HTEC
The first quarter of 2025 presented challenges across our innovation-focused ETFs amid broader market pressures. ROBO declined 9.1%, THNQ fell 9.6%, and HTEC performed roughly in-line with broader markets. Despite these headwinds, several subsectors demonstrated resilience, particularly in Food & Agriculture, Cloud Providers, and Telehealth. The quarter revealed significant contrasts: manufacturing modernization initiatives gaining global momentum, exponential progress in humanoid robotics, landmark healthcare breakthroughs, and the continued evolution of AI infrastructure. Looking ahead, we see strengthening profitability projections, expanding market opportunities for industrial automation, and accelerating convergence of healthcare technology with direct patient care.
ROBO
The world is quickly recognizing modern industrial independence's strategic importance. Despite tariff-related volatility, substantial investment mandates are emerging globally—potentially totaling hundreds of billions, if not trillions—potentially positioning ROBO holdings at the forefront of manufacturing modernization. Manufacturing and Industrial Automation companies, though currently experiencing compressed performance, stand to benefit similarly to how COVID accelerated cloud adoption. Notably, 2025 Factset consensus projections indicate strengthening profitability ahead, with both higher overall earnings and an increased percentage of profitable portfolio companies, following an 18-month period of flat-to-declining performance.
ROBO declined 9.1% amid market pressures in Q1 2025. Food & Agriculture, Integration, and Sensing showed resilience with positive returns, while Healthcare faced headwinds from uncertain US policy. The Compute subsector, currently sold off with all semiconductors, should, in our view, start seeing an increase in demand driven by embedded intelligence enabled by new AI technologies.
We're witnessing exponential progress in humanoids and automation, creating new service markets addressing labor shortages and aging populations. As global nations accelerate domestic production initiatives, market opportunities continue expanding for industrial automation solutions.
THNQ
The THNQ Artificial Intelligence ETF declined 9.6% in Q1 2025, and saw 3 subsectors deliver positive Q1 returns: Cloud Providers (11.4% weight, 6.7% return), Consumer (4.8% weight, 4.1% return), and Ecommerce (7.6% weight, 3.2% return). Unsurprisingly, underperformers included Semiconductor (26.4% weight, -11.6% return), Network & Security (15.3% weight, -16.8% return), and Big Data/Analytics (8% weight, -12.2% return) as we saw pressure appear indiscriminately across the board.
The quarter witnessed a remarkable juxtaposition as Stargate's ambitious $500B ecosystem announcement was quickly overshadowed by market reaction to DeepSeek. While the concept itself wasn't surprising, the delayed market response was more interesting. Open-source is very much part of our thesis and research areas, and ultimately it can create more opportunities for downstream players in connectivity, edge computing, and network and security as the world sees accelerated ROI across more diverse applications from adoption.
We are evolving into an AI landscape where PhD-level agentic AI is available at the “cost of compute.” Overall, the strategy has been shifting toward greater exposure to the enabling infrastructure technologies versus consumer and B2B applications, reflecting our view of potential commoditization pressures on traditional "data wrapper" business models.
HTEC
Healthcare innovation advanced despite market headwinds this quarter, with HTEC declining roughly in-line with broader markets while outperforming pure-play technology counterparts. Telehealth and Data Analytics delivered positive returns, demonstrating resilience amid volatility, while Robotics, Diagnostics, and Process Automation faced greater challenges. Notable Q1 developments included Roche's FDA approval for a novel cardiovascular risk molecular test and Vertex's landmark non-opioid painkiller breakthrough.
The quarter revealed accelerating integration of AI-enabled patient interactions that could potentially redirect billions from administrative systems toward actual healthcare technologies. The Trump administration's advancing "Make America Healthy Again" initiative gained momentum, particularly with policies aimed at preventative care and technology adoption. These developments signal meaningful opportunities for lab process equipment and underutilized diagnostic technologies, in our opinion, despite current concerns.
Looking forward, we anticipate the approaching convergence between direct patient-to-technology healthcare delivery and the growth trajectory of these transformative innovations.
Fund holdings and standard performance can be found here: https://www.roboglobaletfs.com/robo, https://www.roboglobaletfs.com/thnq & https://www.roboglobaletfs.com/htec. The performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Holdings are subject to change. Indices are unmanaged and do not include the effect of fees. One cannot invest directly in an index.
This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the fund or any security in particular. Please consult your financial advisor for further information.
Carefully consider the Funds’ investment objectives, risk factors, charges and expenses before investing. This and additional information can be found on the Funds' full or summary prospectuses, which may be obtained at www.roboglobaletfs.com. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. International investments may also involve risk from unfavorable fluctuations in currency values, differences in generally accepted accounting principles, and from economic or political instability. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments and investments in smaller companies typically exhibit higher volatility. There is no guarantee the funds will achieve their stated objective. ROBO, HTEC, and THNQ are non-diversified.
The liquidity of the A-shares market and trading prices of A-shares could be more severely affected than the liquidity and trading prices of other markets because the Chinese government restricts the flow of capital into and out of the A-shares market. The funds may experience losses due to illiquidity of the Chinese securities markets or delay or disruption in execution or settlement of trades.
The risks associated with investments in Robotics and Automation Companies include, but are not limited to, small or limited markets for such securities, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. Robotics and Automation Companies, especially smaller, start-up companies, tend to be more volatile than securities of companies that do not rely heavily on technology. Rapid change to technologies that affect a company's products could have a material adverse effect on such company's operating results. Robotics and Automation Companies may rely on a combination of patents, copyrights, trademarks and trade secret laws to establish and protect their proprietary rights in their products and technologies. There can be no assurance that the steps taken by these companies to protect their proprietary rights will be adequate to prevent the misappropriation of their technology or that competitors will not independently develop technologies that are substantially equivalent or superior to such companies' technology.
The risks associated with Artificial Intelligence (AI) Companies include, but are not limited to, small or limited markets, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. Rapid change to technologies that affect a company’s products could have a material adverse effect on such company’s operating results. AI Companies also rely heavily on a combination of patents, copyrights, trademarks and trade secret laws to establish and protect their proprietary rights in their products and technologies. There can be no assurance that the steps taken by these companies to protect their proprietary rights will be adequate to prevent the misappropriation of their technology or that competitors will not independently develop technologies that are substantially equivalent or superior to such companies’ technology. AI Companies typically engage in significant amounts of spending on research and development, and there is no guarantee that the products or services produced by these companies will be successful.
The risks associated with Medical Technology Companies include, but are not limited to, small or limited markets for such securities, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation.
Diversification may not protect against market risk.
Beginning September 2, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn't available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to September 2, 2020, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time. The returns shown do not represent the returns you would receive if you traded shares at other times.
The Funds are distributed by SEI Investments Distribution Co. (SIDCO) 1 Freedom Valley Drive, Oaks, PA, 19456